Homework Answers
Equivalent annual worth = Equivalent annual benefit ( EAB) - Equivalent annual cost (EAC)
EAC = ( $4000,000 - $100,000) ( A/P, 9%, 9) + $100000 ( 0.09)
= ( $39,000,000 * 0.167 ) + $9000
= $ 651300 + $9000 = $660300
EAB = $670000
Equivalent annual worth = ( $670000 - $660300 ) = $9700
Its a positive figure means its annual benefit is more than its annual cost hence the company should invest in the crane
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